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Pegasystems (PEGA) Stock Trades Down, Here Is Why


Radek Strnad /
2023/07/27 1:09 pm EDT

What Happened:

Shares of enterprise workflow software provider Pegasystems (NASDAQ:PEGA) fell 5.46% in the morning session after the company reported disappointing second-quarter results that missed analysts' revenue, adjusted operating income, and earnings per share (EPS) expectations. More specifically, subscription revenue missed by a pretty meaningful 7%. This marks the second consecutive quarter where both total revenue and subscription revenue all missed by more than 4%. Management noted that "Our low-code platform for AI-powered decisioning and workflow automation uniquely empowers clients to embrace emerging trends like generative AI and, at the same time, reduce costs and improve customer engagement." The commentary was bullish, but so far, these tailwinds are not yet showing in the financial performance. As such, Pegasystems is a "show me" story where investors are awaiting tangible results before investing behind and crowning the company as a secular beneficiary.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Pegasystems? Access our full analysis report here, it's free.

What is the market telling us:

Pegasystems's shares are quite volatile and over the last year have had 19 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.

Pegasystems is up 46% since the beginning of the year, but at $50.63 per share it is still trading 11.3% below its 52-week high of $57.10 from July 2023. Investors who bought $1,000 worth of Pegasystems's shares 5 years ago would now be looking at an investment worth $890.66.

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